Deciding between super and an income stream

As you approach or start retirement, you need to decide what to do with your super savings.

Did you know that you can choose to leave your money in super indefinitely? Or you can transfer it into an income stream – but which option (or combination of options) is best for you?

Once you are entitled to access your super, you can decide what to do with it.

Choosing the right option is a complex decision, needing to account for many details, including

your current circumstances
your age and life expectancy
amount of super
existing debts.

A common approach is to withdraw a lump sum to pay for any large expenditure items (such as new cars, house renovations, etc) while the rest stays in the super system for multiple benefits.

Many people have discovered that talking with a financial planner, especially one experienced in super and income streams, is invaluable in making this decision. For AvSuper members, our Member Advice Consultants are available in person or over the phone to help bring this decision into focus.

Leave your money in super

Unless you have a defined benefit account, your super will stay in your account until you request a withdrawal.

There are laws regulating when you can access your super, but once you meet those rules you can choose to withdraw some or all of your super at any time.

There is no rule saying you must withdraw your money from AvSuper so you can leave it there as long as you wish, even if you are not working. You will still have access to all member benefits and pay the same low fees, but you may be able to withdraw money once you meet eligibility requirements.

Taking your money from super

You can choose to take your money as a lump sum or move it into an income stream – or a bit of both. It is important to note that money withdrawn from super (ie taken as cash) generally can’t be put into an income stream later on.

Starting an income stream is the most popular choice as it gives you a regular income from your super money whilst AvSuper still manages the money for you. You can open an AvSuper income stream once you reach your preservation age, even if you are still working in certain circumstances.

An income stream is basically a system of regular payments from your super savings. You can choose payments to be more or less frequent (fortnightly, monthly, quarterly, 6 monthly or annually) and how much each payment should be (legislated minimum annual payments based on your age apply).

An AvSuper income stream has the same benefits as our accumulation accounts, such as low fees, investment choice without switching fees, access to personalised financial advice and a long history of strong investment returns.

Why consider an income stream?

you won’t pay tax on any investment earnings within your income stream
withdrawals are generally tax-free once you are 60 or older
the bulk of your money remains invested – and you can choose an investment strategy to suit you
you can still access your money for lump sum withdrawals as you wish
you may get higher Government payments than if you take the money as cash
your money is managed for you and is likely to last longer than if you took it as cash
you continue to have access to all AvSuper member benefits, including personalised advice
you can choose the frequency of payments

Deciding between super and an income stream